EN BANC

[G.R. No. 76607. February 26, 1990.]

UNITED STATES OF AMERICA, FREDERICK M. SMOUSE AND YVONNE

REEVES , petitioners, vs. HON. ELIODORO B. GUINTO, Presiding Judge,
Branch LVII, Regional Trial Court, Angeles City, ROBERTO T. VALENCIA,
EMERENCIANA C. TANGLAO, AND PABLO C. DEL PILAR , respondents.

[G.R. No. 79470. February 26, 1990.]

UNITED STATES OF AMERICA, ANTHONY LAMACHIA, T/SGT. USAF,

WILFREDO BELSA, PETER ORASCION AND ROSE CARTALLA , petitioners,
vs. HON. RODOLFO D. RODRIGO, as Presiding Judge of Branch 7,
Regional Trial Court (BAGUIO CITY), La Trinidad, Benguet and FABIAN
GENOVE , respondents.

[G.R. No. 80018. February 26, 1990.]

UNITED STATES OF AMERICA, TOMI J. KINGI, DARREL D. DYE and

STEVEN F. BOSTICK , petitioners, vs. HON. JOSEFINA D. CEBALLOS, As
Presiding Judge, Regional Trial Court, Branch 66, Capas, Tarlac, and
LUIS BAUTISTA , respondents.

[G.R. No. 80258. February 26, 1990.]

UNITED STATES OF AMERICA, MAJOR GENERAL MICHAEL P. C. CARNS,

AIC ERNEST E. RIVENBURGH, AIC ROBIN BLEVINS, SGT. NOEL A.
GONZALES, SGT. THOMAS MITCHELL, SGT. WAYNE L. BENJAMIN, ET
AL. , petitioners, vs. HON. CONCEPCION S. ALARCON VERGARA, as
Presiding Judge, Branch 62 REGIONAL TRIAL COURT, Angeles City, and
RICKY SANCHEZ, FREDDIE SANCHEZ AKA FREDDIE RIVERA, EDWIN
MARIANO, AKA JESSIE DOLORES SANGALANG, ET AL. , respondents.

Luna, Sison & Manas Law Office for petitioners.

SYLLABUS

1. CONSTITUTIONAL LAW; DOCTRINE OF STATE IMMUNITY FROM SUIT; GENERALLY

ACCEPTED PRINCIPLE OF INTERNATIONAL LAW; EMBODIED IN PHILIPPINE
CONSTITUTION. The rule that a state may not be sued without its consent, now
expressed in Article XVI, Section 3, of the 1987 Constitution, is one of the generally
accepted principles of international law that we have adopted as part of the law of our land
under Article II, Section 2. This latter provision merely reiterates a policy earlier embodied
in the 1935 and 1973 Constitutions and also intended to manifest our resolve to abide by
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 the rules of the international community.
2. ID., ID., ID., PRINCIPLE DEEMED INCORPORATED IN THE LAW OF EVERY CIVILIZED
STATE; STATE IS AUTOMATICALLY OBLIGATED TO COMPLY WITH THE PRINCIPLE.
Even without such affirmation, we would still be bound by the generally accepted
principles of international law under the doctrine of incorporation. Under this doctrine, as
accepted by the majority of states, such principles are deemed incorporated in the law of
every civilized state as a condition and consequence of its membership in the society of
nations. Upon its admission to such society, the state is automatically obligated to comply
with these principles in its relations with other states.
3. ID.; ID.; BASIS. As applied to the local state, the doctrine of state immunity is
based on the justification given by Justice Holmes that "there can be no legal right against
the authority which makes the law on which the right depends." There are other practical
reasons for the enforcement of the doctrine. In the case of the foreign state sought to be
impleaded in the local jurisdiction, the added inhibition is expressed in the maxim par in
parem, non habet imperium. All states are sovereign equals and cannot assert jurisdiction
over one another. A contrary disposition would, in the language of a celebrated case,
"unduly vex the peace of nations."
4. ID., ID., APPLIES TO OFFICIALS OF THE STATE FOR ACTS PERFORMED IN THE
DISCHARGE OF THEIR DUTIES. While the doctrine appears to prohibit only suits against
the state without its consent, it is also applicable to complaints filed against officials of
the state for acts allegedly performed by them in the discharge of their duties. The rule is
that if the judgment against such officials will require the state itself to perform an
affirmative act to satisfy the same, such as the appropriation of the amount needed to pay
the damages awarded against them, the suit must be regarded as against the state itself
although it has not been formally impleaded. In such a situation, the state may move to
dismiss the complaint on the ground that it has been filed without its consent.
5. ID., ID., NOT ABSOLUTE AND MAY BE SUED IF STATE GIVES CONSENT. The
doctrine is sometimes derisively called "the royal prerogative of dishonesty" because of
the privilege it grants the state to defeat any legitimate claim against it by simply invoking
its non-suability. That is hardly fair, at least in democratic societies, for the state is not an
unfeeling tyrant unmoved by the valid claims of its citizens. In fact, the doctrine is not
absolute and does not say the state may not be sued under any circumstance. On the
contrary, the rule says that the state may not be sued without its consent, which clearly
imports that it may be sued if it consents.
6. ID., ID., ID., CONSENT MAY BE GIVEN EXPRESSLY OR IMPLIEDLY. The consent of
the state to be sued may be manifested expressly or impliedly. Express consent may be
embodied in a general law or a special law. Consent is implied when the state enters into a
contract or it itself commences litigation.
7. ID., ID., ID., ID., WAIVER OF IMMUNITY; INSTANCES. The general law waiving the
immunity of the state from suit is found in Act No. 3083, under which the Philippine
government "consents and submits to be sued upon any moneyed claim involving liability
arising from contract, express or implied, which could serve as a basis of civil action
between private parties." In Merritt v. Government of the Philippine Islands, a special law
was passed to enable a person to sue the government for an alleged tort. When the
government enters into a contract, it is deemed to have descended to the level of the other
contracting party and divested of its sovereign immunity from suit with its implied
consent. Waiver is also implied when the government files a complaint, thus opening itself
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 to a counterclaim.
8. ID., ID., ID., ID., ID., ID., EXCEPTIONS. The above rules are subject to qualification.
Express consent is effected only by the will of the legislature through the medium of a duly
enacted statute. We have held that not all contracts entered into by the government will
operate as a waiver of its non-suability; distinction must be made between its sovereign
and proprietary acts. As for the filing of a complaint by the government, suability will result
only where the government is claiming affirmative relief from the defendant.
9. ID., ID., ID., ID., ID., UNITED STATES OF AMERICA DEEMED TO HAVE IMPLIEDLY
WAIVED ITS NON-SUABILITY IF IT HAS ENTERED INTO A CONTRACT IN ITS PROPRIETARY
CAPACITY. There is no question that the United States of America, like any other state,
will be deemed to have impliedly waived its non-suability if it has entered into a contract in
its proprietary or private capacity. It is only when the contract involves its sovereign or
governmental capacity that no such waiver may be implied. This was our ruling in United
States of America v. Ruiz, where the transaction in question dealt with the improvement of
the wharves in the naval installation at Subic Bay. As this was a clearly governmental
function, we held that the contract did not operate to divest the United States of its
sovereign immunity from suit.
10. ID., ID., ID., ID., ID., CHARGES MAY NOT BE SUMMARILY DISMISSED ON MERE
ASSERTION THAT ACTS ARE IMPUTABLE TO THE UNITED STATES OF AMERICA. The
other petitioners in the cases before us all aver they have acted in the discharge of their
official functions as officers or agents of the United States. However, this is a matter of
evidence. The charges against them may not be summarily dismissed on their mere
assertion that their acts are imputable to the United States of America, which has not given
its consent to be sued. In fact, the defendants are sought to be held answerable for
personal torts in which the United States itself is not involved. If found liable, they and they
alone must satisfy the judgment.
11. ID., ID., ID., ID., ID., PETITIONERS CHARGED WITH THE ENFORCEMENT OF LAW
REGARDING PROHIBITED DRUGS ARE AGENTS OF THE UNITED STATES. It is clear from
a study of the records of G.R. No. 80018 that the individually-named petitioners therein
were acting in the exercise of their official functions when they conducted the buy-bust
operation against the complainant and thereafter testified against him at his trial. The said
petitioners were in fact connected with the Air Force Office of Special Investigators and
were charged precisely with the function of preventing the distribution, possession and
use of prohibited drugs and prosecuting those guilty of such acts. It cannot for a moment
be imagined that they were acting in their private or unofficial capacity when they
apprehended and later testified against the complainant. It follows that for discharging
their duties as agents of the United States, they cannot be directly impleaded for acts
imputable to their principal, which has not given its consent to be sued.
12. ID., ID., ID., ID., ID., SUABILITY AND LIABILITY, DIFFERENTIATED. There seems to
be a failure to distinguish between suability and liability and a misconception that the two
terms are synonymous. Suability depends on the consent of the state to be sued, liability
on the applicable law and the established facts. The circumstance that a state is suable
does not necessarily mean that it is liable; on the other hand, it can never be held liable if it
does not first consent to be sued. Liability is not conceded by the mere fact that the state
has allowed itself to be sued. When the state does waive its sovereign immunity, it is only
giving the plaintiff the chance to prove, if it can, that the defendant is liable.
13. ID., ID., ID., ID., ID., ARTICLE 2180 OF THE CIVIL CODE ESTABLISHES A RULE OF
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 LIABILITY. The private respondent invokes Article 2180 of the Civil Code which holds the
government liable if it acts through a special agent. The argument, it would seem, is
premised on the ground that since the officers are designated "special agents," the United
States government should be liable for their torts. The said article establishes a rule of
liability, not suability. The government may be held liable under this rule only if it first allows
itself to be sued through any of the accepted forms of consent.

14. ID., ID., ID., ID., ID., AN AGENT PERFORMING REGULAR FUNCTIONS IS NOT A
SPECIAL AGENT EVEN IF SO DENOMINATED; ARTICLE APPLIES ONLY TO PHILIPPINE
GOVERNMENT. Moreover, the agent performing his regular functions is not a special
agent even if he is so denominated, as in the case at bar. No less important, the said
provision appears to regulate only the relations of the local state with its inhabitants and,
hence, applies only to the Philippine government and not to foreign governments
impleaded in our courts.
15. ID., ID., ID., ID., ID., EXPRESS WAIVER MUST BE EFFECTED THROUGH A DULY-
ENACTED STATUTE. We reject the conclusion of the trial court that the answer filed by
the special counsel of the Office of the Sheriff Judge Advocate of Clark Air Base was a
submission by the United States government to its jurisdiction. As we noted in Republic v.
Purisima, express waiver of immunity cannot be made by a mere counsel of the
government but must be effected through a duly-enacted statute. Neither does such
answer come under the implied forms of consent as earlier discussed.
16. ID., ID., ID., ID., ID., INQUIRY MUST BE MADE AS TO WHAT CAPACITY PETITIONERS
WERE ACTING. But even as we are certain that individual petitioners in G.R. No. 80018
were acting in the discharge of their official functions, we hesitate to make the same
conclusion in G.R. No. 80258. The contradictory factual allegations in this case deserve in
our view a closer study of what actually happened to the plaintiffs. The record is too
meager to indicate if the defendants were really discharging their official duties or had
actually exceeded their authority when the incident in question occurred. Lacking this
information, this Court cannot directly decide this case. The needed inquiry must first be
made by the lower court so it may assess and resolve the conflicting claims of the parties
on the basis of the evidence that has yet to be presented at the trial. Only after it shall have
determined in what capacity the petitioners were acting at the time of the incident in
question will this Court determine, if still necessary, if the doctrine of state immunity is
applicable.
17. ID., ID., ID., ID., ID., DOCTRINE CANNOT BE INVOKED WHERE THE STATE ENTERED
INTO A CONTRACT IN THE DISCHARGE OF ITS PROPRIETARY FUNCTION; CASE AT BAR.
From the circumstances, the Court can assume that the restaurant services offered at the
John Hay Air Station partake of the nature of a business enterprise undertaken by the
United States government in its proprietary capacity. Such services are not extended to the
American servicemen for free as a perquisite of membership in the Armed Forces of the
United States. Neither does it appear that they are exclusively offered to these servicemen;
on the contrary, it is well known that they are available to the general public as well,
including the tourists in Baguio City, many of whom make it a point to visit John Hay for
this reason. All persons availing themselves of this facility pay for the privilege like all other
customers as in ordinary restaurants. Although the prices are concededly reasonable and
relatively low, such services are undoubtedly operated for profit, as a commercial and not
a governmental activity. The consequence of this finding is that the petitioners cannot
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 invoke the doctrine of state immunity to justify the dismissal of the damage suit against
them by Genove. Such defense will not prosper even if it be established that they were
acting as agents of the United States when they investigated and later dismissed Genove.
For that matter, not even the United States government itself can claim such immunity. The
reason is that by entering into the employment contract with Genove in the discharge of its
proprietary functions, it impliedly divested itself of its sovereign immunity from suit.
18. LABOR AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT; DISMISSAL
FOR THE UNBELIEVABLY NAUSEATING ACT IS PROPER. The dismissal of the private
respondent was decided upon only after a thorough investigation where it was established
beyond doubt that he had polluted the soup stock with urine. The investigation, in fact, did
not stop there. Despite the definitive finding of Genove's guilt, the case was still referred to
the board of arbitrators provided for in the collective bargaining agreement. This board
unanimously affirmed the findings of the investigators and recommended Genove's
dismissal. There was nothing arbitrary about the proceedings. The petitioners acted quite
properly in terminating the private respondent's employment for his unbelievably
nauseating act. It is surprising that he should still have the temerity to file his complaint for
damages after committing his utterly disgusting offense.
19. ID.; ID.; BARBERSHOPS ARE NOT AGENCIES OF THE UNITED STATES ARMED
FORCES; IMMUNITY FROM SUIT CANNOT BE INVOKED. Concerning G.R. No. 76607, we
also find that the barbershops subject of the concessions granted by the United States
government are commercial enterprises operated by private persons. They are not
agencies of the United States Armed Forces nor are their facilities demandable as a matter
of right by the American servicemen. This being the case, the petitioners cannot plead any
immunity from the complaint filed by the private respondents in the court below. The
contracts in question being decidedly commercial, the conclusion reached in the United
States of America v. Ruiz case cannot be applied here.

DECISION

CRUZ , J : p

These cases have been consolidated because they all involve the doctrine of state
immunity. The United States of America was not impleaded in the complaints below but
has moved to dismiss on the ground that they are in effect suits against it to which it has
not consented. It is now contesting the denial of its motions by the respondent judges. cdll

In G.R. No. 76607, the private respondents are suing several officers of the U.S. Air Force
stationed in Clark Air Base in connection with the bidding conducted by them for contracts
for barbering services in the said base.
On February 24, 1986, the Western Pacific Contracting Office, Okinawa Area Exchange, U.S.
Air Force, solicited bids for such contracts through its contracting officer, James F. Shaw.
Among those who submitted their bids were private respondents Roberto T. Valencia,
Emerenciana C. Tanglao, and Pablo C. del Pilar. Valencia had been a concessionaire inside
Clark for 34 years; del Pilar for 12 years; and Tanglao for 50 years. LLjur

The bidding was won by Ramon Dizon, over the objection of the private respondents, who
claimed that he had made a bid for four facilities, including the Civil Engineering Area,
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 which was not included in the invitation to bid.
The private respondents complained to the Philippine Area Exchange (PHAX). The latter,
through its representatives, petitioners Yvonne Reeves and Frederic M. Smouse, explained
that the Civil Engineering concession had not been awarded to Dizon as a result of the
February 24, 1986 solicitation. Dizon was already operating this concession, then known
as the NCO club concession, and the expiration of the contract had been extended from
June 30, 1986 to August 31, 1986. They further explained that the solicitation of the CE
barbershop would be available only by the end of June and the private respondents would
be notified. Cdpr

On June 30,1986, the private respondents filed a complaint in the court below to compel
PHAX and the individual petitioners to cancel the award to defendant Dizon, to conduct a
rebidding for the barbershop concessions and to allow the private respondents by a writ
of preliminary injunction to continue operating the concessions pending litigation. 1
Upon the filing of the complaint, the respondent court issued an ex parte order directing
the individual petitioners to maintain the status quo.
On July 22, 1986, the petitioners filed a motion to dismiss and opposition to the petition
for preliminary injunction on the ground that the action was in effect a suit against the
United States of America, which had not waived its non-suability. The individual
defendants, as officials/employees of the U.S. Air Force, were also immune from suit.
On the same date, July 22, 1986, the trial court denied the application for a writ of
preliminary injunction.
On October 10, 1988, the trial court denied the petitioners' motion to dismiss, holding in
part as follows:
From the pleadings thus far presented to this Court by the parties, the Court's
attention is called by the relationship between the plaintiffs as well as the
defendants, including the US Government in that prior to the bidding or
solicitation in question, there was a binding contract between the plaintiffs as
well as the defendants, including the US Government. By virtue of said contract of
concession, it is the Court's understanding that neither the US Government nor the
herein principal defendants would become the employer/s of the plaintiffs but
that the latter are the employers themselves of the barbers, etc. with the employer,
the plaintiffs herein, remitting the stipulated percentage of commissions to the
Philippine Area Exchange. The same circumstance would become m effect when
the Philippine Area Exchange opened for bidding or solicitation the questioned
barber shop concessions. To this extent, therefore, indeed a commercial
transaction has been entered, and for purposes of the said solicitation, would
necessarily be entered between the plaintiffs as well as the defendants.
The Court, further, is of the view that Article XVIII of the RP-US Bases Agreement
does not cover such kind of services falling under the concessionaireship, such as
a barber shop concession. 2

On December 11, 1986, following the filing of the herein petition for certiorari and
prohibition with preliminary injunction, we issued a temporary restraining order against
further proceedings in the court below. 3

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 In G.R. No. 79470, Fabian Genove filed a complaint for damages against petitioners
Anthony Lamachia, Wilfredo Belsa, Rose Cartalla and Peter Orascion for his dismissal as
cook in the U.S. Air Force Recreation Center at the John Hay Air Station in Baguio City. It
had been ascertained after investigation, from the testimony of Belsa, Cartalla and
Orascion, that Genove had poured urine into the soup stock used in cooking the
vegetables served to the club customers. Lamachia, as club manager, suspended him and
thereafter referred the case to a board of arbitrators conformably to the collective
bargaining agreement between the Center and its employees. The board unanimously
found him guilty and recommended his dismissal. This was effected on March 5, 1986, by
Col. David C. Kimball, Commander of the 3rd Combat Support Group, PACAF Clark Air
Force Base. Genove's reaction was to file his complaint in the Regional Trial Court of
Baguio City against the individual petitioners. 4
On March 13, 1987, the defendants, joined by the United States of America, moved to
dismiss the complaint, alleging that Lamachia, as an officer of the U.S. Air Force stationed
at John Hay Air Station, was immune from suit for the acts done by him in his official
capacity. They argued that the suit was in effect against the United States, which had not
given its consent to be sued. Cdpr

This motion was denied by the respondent judge on June 4, 1987, in an order which read in
part:
It is the understanding of the Court, based on the allegations of the complaint
which have been hypothetically admitted by defendants upon the filing of their
motion to dismiss that although defendants acted initially in their official
capacities, their going beyond what their functions called for brought them out of
the protective mantle of whatever immunities they may have had in the
beginning. Thus, the allegation that the acts complained of were "illegal," done,
with "extreme bad faith" and with "pre-conceived sinister plan to harass and
finally dismiss" the plaintiff, gains significance. 5

The petitioners then came to this Court seeking certiorari and prohibition with preliminary
injunction.
In G.R. No. 80018, Luis Bautista, who was employed as a barracks boy in Camp O'Donnell,
an extension of Clark Air Base, was arrested following a buy-bust operation conducted by
the individual petitioners herein, namely, Tomi J. King, Darrel D. Dye and Stephen F. Bostick,
officers of the U.S. Air Force and special agents of the Air Force Office of Special
Investigators (AFOSI). On the basis of the sworn statements made by them, an information
for violation of R.A. 6425, otherwise known as the Dangerous Drugs Act, was filed against
Bautista in the Regional Trial Court of Tarlac. The above-named officers testified against
him at his trial. As a result of the filing of the charge, Bautista was dismissed from his
employment. He then filed a complaint for damages against the individual petitioners
herein claiming that it was because of their acts that he was removed. 6
During the period for filing of the answer, Mariano Y. Navarro, a special counsel assigned
to the International Law Division, Office of the Staff Judge Advocate of Clark Air Base,
entered a special appearance for the defendants and moved for an extension within which
to file an "answer and/or other pleadings." His reason was that the Attorney General of the
United States had not yet designated counsel to represent the defendants, who were being
sued for their official acts. Within the extended period, the defendants, without the
assistance of counsel or authority from the U.S. Department of Justice, filed their answer.
They alleged therein as affirmative defenses that they had only done their duty in the
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 enforcement of the laws of the Philippines inside the American bases pursuant to the RP-
US Military Bases Agreement.
On May 7, 1987, the law firm of Luna, Sison and Manas, having been retained to represent
the defendants, filed with leave of court a motion to withdraw the answer and dismiss the
complaint. The ground invoked was that the defendants were acting in their official
capacity when they did the acts complained of and that the complaint against them was in
effect a suit against the United States without its consent. prcd

The motion was denied by the respondent judge in his order dated September 11, 1987,
which held that the claimed immunity under the Military Bases Agreement covered only
criminal and not civil cases. Moreover, the defendants had come under the jurisdiction of
the court when they submitted their answer. 7
Following the filing of the herein petition for certiorari and prohibition with preliminary
injunction, we issued on October 14, 1987, a temporary restraining order. 8
In G.R. No. 80258, a complaint for damages was filed by the private respondents against
the herein petitioners (except the United States of America), for injuries allegedly sustained
by the plaintiffs as a result of the acts of the defendants. 9 There is a conflict of factual
allegations here. According to the plaintiffs, the defendants beat them up, handcuffed
them and unleashed dogs on them which bit them in several parts of their bodies and
caused extensive injuries to them. The defendants deny this and claim the plaintiffs were
arrested for theft and were bitten by the dogs because they were struggling and resisting
arrest. The defendants stress that the dogs were called off and the plaintiffs were
immediately taken to the medical center for treatment of their wounds.
In a motion to dismiss the complaint, the United States of America and the individually
named defendants argued that the suit was in effect a suit against the United States, which
had not given its consent to be sued. The defendants were also immune from suit under
the RP-US Bases Treaty for acts done by them in the performance of their official
functions.
The motion to dismiss was denied by the trial court in its order dated August 10, 1987,
reading in part as follows:
The defendants certainly cannot correctly argue that they are immune from suit.
The allegations, of the complaint which is sought to be dismissed, had to be
hypothetically admitted and whatever ground the defendants may have, had to be
ventilated during the trial of the case on the merits. The complaint alleged
criminal acts against the individually-named defendants and from the nature of
said acts it could not be said that they are Acts of State, for which immunity
should be invoked. If the Filipinos themselves are duty bound to respect, obey and
submit themselves to the laws of the country, with more reason, the members of
the United States Armed Forces who are being treated as guests of this country
should respect, obey and submit themselves to its laws. 1 0

and so was the motion for reconsideration. The defendants submitted their answer as
required but subsequently led their petition for certiorari and prohibition with
preliminary injunction with this Court. We issued a temporary restraining order on
October 27, 1987. 1 1
II
The rule that a state may not be sued without its consent, now expressed in Article XVI,
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 Section 3, of the 1987 Constitution, is one of the generally accepted principles of
international law that we have adopted as part of the law of our land under Article II,
Section 2. This latter provision merely reiterates a policy earlier embodied in the 1935 and
1973 Constitutions and also intended to manifest our resolve to abide by the rules of the
international community.
Even without such affirmation, we would still be bound by the generally accepted
principles of international law under the doctrine of incorporation. Under this doctrine, as
accepted by the majority of states, such principles are deemed incorporated in the law of
every civilized state as a condition and consequence of its membership in the society of
nations. Upon its admission to such society, the state is automatically obligated to comply
with these principles in its relations with other states.
As applied to the local state, the doctrine of state immunity is based on the justification
given by Justice Holmes that "there can be no legal right against the authority which makes
the law on which the right depends." 1 2 There are other practical reasons for the
enforcement of the doctrine. In the case of the foreign state sought to be impleaded in the
local jurisdiction, the added inhibition is expressed in the maxim par in parem, non habet
imperium. All states are sovereign equals and cannot assert jurisdiction over one another.
A contrary disposition would, in the language of a celebrated case, "unduly vex the peace of
nations." 1 3
While the doctrine appears to prohibit only suits against the state without its consent, it is
also applicable to complaints filed against officials of the state for acts allegedly
performed by them in the discharge of their duties. The rule is that if the judgment against
such officials will require the state itself to perform an affirmative act to satisfy the same,
such as the appropriation of the amount needed to pay the damages awarded against
them, the suit must be regarded as against the state itself although it has not been
formally impleaded. 1 4 In such a situation, the state may move to dismiss the complaint on
the ground that it has been filed without its consent.
The doctrine is sometimes derisively called "the royal prerogative of dishonesty" because
of the privilege it grants the state to defeat any legitimate claim against it by simply
invoking its non-suability. That is hardly fair, at least in democratic societies, for the state
is not an unfeeling tyrant unmoved by the valid claims of its citizens. In fact, the doctrine is
not absolute and does not say the state may not be sued under any circumstance. On the
contrary, the rule says that the state may not be sued without its consent, which clearly
imports that it may be sued if it consents.

The consent of the state to be sued may be manifested expressly or impliedly. Express
consent may be embodied in a general law or a special law. Consent is implied when the
state enters into a contract or it itself commences litigation.
The general law waiving the immunity of the state from suit is found in Act No. 3083, under
which the Philippine government "consents and submits to be sued upon any moneyed
claim involving liability arising from contract, express or implied, which could serve as a
basis of civil action between private parties." In Merritt v. Government of the Philippine
Islands, 1 5 a special law was passed to enable a person to sue the government for an
alleged tort. When the government enters into a contract, it is deemed to have descended
to the level of the other contracting party and divested of its sovereign immunity from suit
with its implied consent. 1 6 Waiver is also implied when the government files a complaint,
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 thus opening itself to a counterclaim. 1 7
The above rules are subject to qualification. Express consent is effected only by the will of
the legislature through the medium of a duly enacted statute. 1 8 We have held that not all
contracts entered into by the government will operate as a waiver of its non-suability;
distinction must be made between its sovereign and proprietary acts. 1 9 As for the filing of
a complaint by the government, suability will result only where the government is claiming
affirmative relief from the defendant. 2 0
In the case of the United States of America, the customary rule of international law on
state immunity is expressed with more specificity in the RP-US Bases Treaty. Article III
thereof provides as follows:
It is mutually agreed that the United States shall have the rights, power and
authority within the bases which are necessary for the establishment, use,
operation and defense thereof or appropriate for the control thereof and all the
rights, power and authority within the limits of the territorial waters and air space
adjacent to, or in the vicinity of, the bases which are necessary to provide access
to them or appropriate for their control.

The petitioners also rely heavily on Baer v. Tizon, 2 1 along with several other decisions, to
support their position that they are not suable in the cases below, the United States not
having waived its sovereign immunity from suit. It is emphasized that in Baer, the Court
held:
The invocation of the doctrine of immunity from suit of a foreign state without its
consent is appropriate. More specifically, insofar as alien armed forces is
concerned, the starting point is Raquiza v. Bradford, a 1945 decision. In
dismissing a habeas corpus petition for the release of petitioners confined by
American army authorities, Justice Hilado, speaking for the Court, cited Coleman
v. Tennessee, where it was explicitly declared: `It is well settled that a foreign
army, permitted to march through a friendly country or to be stationed in it, by
permission of its government or sovereign, is exempt from the civil and criminal
jurisdiction of the place.' Two years later, in Tubb and Tedrow v. Griess, this Court
relied on the ruling in Raquiza v. Bradford and cited in support thereof excerpts
from the works of the following authoritative writers: Vattel, Wheaton, Hall,
Lawrence, Oppenheim, Westlake, Hyde, and McNair and Lauterpacht. Accuracy
demands the clarification that after the conclusion of the Philippine-American
Military Bases Agreement, the treaty provisions should control on such matter, the
assumption being that there was a manifestation of the submission to
jurisdiction on the part of the foreign power whenever appropriate. More to the
point is Syquia v. Almeda Lopez, where plaintiffs as lessors sued the
Commanding General of the United States Army in the Philippines, seeking the
restoration to them of the apartment buildings they owned leased to the United
States armed forces stationed in the Manila area. A motion to dismiss on the
ground of non-suability was filed and upheld by respondent Judge. The matter
was taken to this Court in a mandamus proceeding. It failed. It was the ruling that
respondent Judge acted correctly considering that the `action must be considered
as one against the U.S. Government.' The opinion of Justice Montemayor
continued: `It is clear that the courts of the Philippines including the Municipal
Court of Manila have no jurisdiction over the present case for unlawful detainer.
The question of lack of jurisdiction was raised and interposed at the very
beginning of the action. The U.S. Government has not given its consent to the
filing of this suit which is essentially against her, though not in name. Moreover,
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 this is not only a case of a citizen filing a suit against his own Government
without the latter's consent but it is of a citizen filing an action against a foreign
government without said government's consent, which renders more obvious the
lack of jurisdiction of the courts of his country. The principles of law behind this
rule are so elementary and of such general acceptance that we deem it
unnecessary to cite authorities in support thereof.' Then came Marvel Building
Corporation v. Philippine War Damage Commission, where respondent, a United
States Agency established to compensate damages suffered by the Philippines
during World War II was held as falling within the above doctrine as the suit
against it `would eventually be a charge against or financial liability of the United
States Government because . . ., the Commission has no funds of its own for the
purpose of paying money judgments.' The Syquia ruling was again explicitly
relied upon in Marquez Lim v. Nelson, involving a complaint for the recovery of a
motor launch, plus damages, the special defense interposed being `that the vessel
belonged to the United States Government, that the defendants merely acted as
agents of said Government, and that the United States Government is therefore
the real party in interest.' So it was in Philippine Alien Property Administration v.
Castelo, where it was held that a suit against Alien Property Custodian and the
Attorney General of the United States involving vested property under the Trading
with the Enemy Act is in substance a suit against the United States. To the same
effect is Parreno v. McGranery, as the following excerpt from the opinion of
Justice Tuazon clearly shows: `It is a widely accepted principle of international
law, which is made a part of the law of the land (Article II, Section 3 of the
Constitution), that a foreign state may not be brought to suit before the courts of
another state or its own courts without its consent.' Finally, there is Johnson v.
Turner, an appeal by the defendant, then Commanding General, Philippine
Command (Air Force, with office at Clark Field) from a decision ordering the return
to plaintiff of the confiscated military payment certificates known as scrip
money. In reversing the lower court decision, this Tribunal, through Justice
Montemayor, relied on Syquia v. Almeda Lopez, explaining why it could not be
sustained. LLphil

It bears stressing at this point that the above observations do not confer on the United
States of America a blanket immunity for all acts done by it or its agents in the Philippines.
Neither may the other petitioners claim that they are also insulated from suit in this country
merely because they have acted as agents of the United States in the discharge of their
official functions.
There is no question that the United States of America, like any other state, will be deemed
to have impliedly waived its non-suability if it has entered into a contract in its proprietary
or private capacity. It is only when the contract involves its sovereign or governmental
capacity that no such waiver may be implied. This was our ruling in United States of
America v. Ruiz, 2 2 where the transaction in question dealt with the improvement of the
wharves in the naval installation at Subic Bay. As this was a clearly governmental function,
we held that the contract did not operate to divest the United States of its sovereign
immunity from suit. In the words of Justice Vicente Abad Santos:
The traditional rule of immunity exempts a State from being sued in the courts of
another State without its consent or waiver. This rule is a necessary consequence
of the principles of independence and equality of States. However, the rules of
International Law are not petrified; they are constantly developing and evolving.
And because the activities of states have multiplied, it has been necessary to
distinguish them between sovereign and governmental acts (jure imperii) and
private, commercial and proprietary acts (jure gestionis). The result is that State
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 immunity now extends only to acts jure imperii. The restrictive application of
State immunity is now the rule in the United States, the United Kingdom and other
states in Western Europe.

xxx xxx xxx

The restrictive application of State immunity is proper only when the proceedings
arise out of commercial transactions of the foreign sovereign, its commercial
activities or economic affairs. Stated differently, a State may be said to have
descended to the level of an individual and can thus be deemed to have tacitly
given its consent to be sued only when it enters into business contracts. It does
not apply where the contract relates to the exercise of its sovereign functions. In
this case the projects are an integral part of the naval base which is devoted to
the defense of both the United States and the Philippines, indisputably a function
of the government of the highest order; they are not utilized for nor dedicated to
commercial or business purposes.

The other petitioners in the cases before us all aver they have acted in the discharge of
their official functions as officers or agents of the United States. However, this is a matter
of evidence. The charges against them may not be summarily dismissed on their mere
assertion that their acts are imputable to the United States of America, which has not given
its consent to be sued. In fact, the defendants are sought to be held answerable for
personal torts in which the United States itself is not involved. If found liable, they and they
alone must satisfy the judgment.

In Festejo v. Fernando, 2 3 a bureau director, acting without any authority whatsoever,

appropriated private land and converted it into public irrigation ditches. Sued for the value
of the lots invalidly taken by him, he moved to dismiss the complaint on the ground that
the suit was in effect against the Philippine government, which had not given its consent to
be sued. This Court sustained the denial of the motion and held that the doctrine of state
immunity was not applicable. The director was being sued in his private capacity for a
personal tort.
With these considerations in mind, we now proceed to resolve the cases at hand.
III
It is clear from a study of the records of G.R. No. 80018 that the individually-named
petitioners therein were acting in the exercise of their official functions when they
conducted the buy-bust operation against the complainant and thereafter testified against
him at his trial. The said petitioners were in fact connected with the Air Force Office of
Special Investigators and were charged precisely with the function of preventing the
distribution, possession and use of prohibited drugs and prosecuting those guilty of such
acts. It cannot for a moment be imagined that they were acting in their private or unofficial
capacity when they apprehended and later testified against the complainant. It follows that
for discharging their duties as agents of the United States, they cannot be directly
impleaded for acts imputable to their principal, which has not given its consent to be sued.
As we observed in Sanders v. Veridiano: 2 4
Given the official character of the above-described letters, we have to conclude
that the petitioners were, legally speaking, being sued as officers of the United
States government. As they have acted on behalf of that government, and within
the scope of their authority, it is that government, and not the petitioners
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 personally, that is responsible for their acts.

The private respondent invokes Article 2180 of the Civil Code which holds the government
liable if it acts through a special agent. The argument, it would seem, is premised on the
ground that since the officers are designated "special agents," the United States
government should be liable for their torts.
There seems to be a failure to distinguish between suability and liability and a
misconception that the two terms are synonymous. Suability depends on the consent of
the state to be sued, liability on the applicable law and the established facts. The
circumstance that a state is suable does not necessarily mean that it is liable; on the other
hand, it can never be held liable if it does not first consent to be sued. Liability is not
conceded by the mere fact that the state has allowed itself to be sued. When the state
does waive its sovereign immunity, it is only giving the plaintiff the chance to prove, if it
can, that the defendant is liable.
The said article establishes a rule of liability, not suability. The government may be held
liable under this rule only if it first allows itself to be sued through any of the accepted
forms of consent.
Moreover, the agent performing his regular functions is not a special agent even if he is so
denominated, as in the case at bar. No less important, the said provision appears to
regulate only the relations of the local state with its inhabitants and, hence, applies only to
the Philippine government and not to foreign governments impleaded in our courts.
We reject the conclusion of the trial court that the answer filed by the special counsel of
the Office of the Sheriff Judge Advocate of Clark Air Base was a submission by the United
States government to its jurisdiction. As we noted in Republic v. Purisima, 2 5 express
waiver of immunity cannot be made by a mere counsel of the government but must be
effected through a duly-enacted statute. Neither does such answer come under the
implied forms of consent as earlier discussed. Cdpr

But even as we are certain that the individual petitioners in G.R. No. 80018 were acting in
the discharge of their official functions, we hesitate to make the same conclusion in G.R.
No. 80258. The contradictory factual allegations in this case deserve in our view a closer
study of what actually happened to the plaintiffs. The record is too meager to indicate if
the defendants were really discharging their official duties or had actually exceeded their
authority when the incident in question occurred. Lacking this information, this Court
cannot directly decide this case. The needed inquiry must first be made by the lower court
so it may assess and resolve the conflicting claims of the parties on the basis of the
evidence that has yet to be presented at the trial. Only after it shall have determined in
what capacity the petitioners were acting at the time of the incident in question will this
Court determine, if still necessary, if the doctrine of state immunity is applicable.
In G.R. No. 79470, private respondent Genove was employed as a cook in the Main Club
located at the U.S. Air Force Recreation Center, also known as the Open Mess Complex, at
John Hay Air Station. As manager of this complex, petitioner Lamachia is responsible for
eleven diversified activities generating an annual income of $2 million. Under his executive
management are three service restaurants, a cafeteria, a bakery, a Class VI store, a coffee
and pantry shop, a main cashier cage, an administrative office, and a decentralized
warehouse which maintains a stock level of $200,000.00 per month in resale items. He
supervises 167 employees, one of whom was Genove, with whom the United States
government has concluded a collective bargaining agreement.
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 From these circumstances, the Court can assume that the restaurant services offered at
the John Hay Air Station partake of the nature of a business enterprise undertaken by the
United States government in its proprietary capacity. Such services are not extended to the
American servicemen for free as a perquisite of membership in the Armed Forces of the
United States. Neither does it appear that they are exclusively offered to these servicemen;
on the contrary, it is well known that they are available to the general public as well,
including the tourists in Baguio City, many of whom make it a point to visit John Hay for
this reason. All persons availing themselves of this facility pay for the privilege like all other
customers as in ordinary restaurants. Although the prices are concededly reasonable and
relatively low, such services are undoubtedly operated for profit, as a commercial and not
a governmental activity.
The consequence of this finding is that the petitioners cannot invoke the doctrine of state
immunity to justify the dismissal of the damage suit against them by Genove. Such
defense will not prosper even if it be established that they were acting as agents of the
United States when they investigated and later dismissed Genove. For that matter, not
even the United States government itself can claim such immunity. The reason is that by
entering into the employment contract with Genove in the discharge of its proprietary
functions, it impliedly divested itself of its sovereign immunity from suit.
But these considerations notwithstanding, we hold that the complaint against the
petitioners in the court below must still be dismissed. While suable, the petitioners are
nevertheless not liable. It is obvious that the claim for damages cannot be allowed on the
strength of the evidence before us, which we have carefully examined.
The dismissal of the private respondent was decided upon only after a thorough
investigation where it was established beyond doubt that he had polluted the soup stock
with urine. The investigation, in fact, did not stop there. Despite the definitive finding of
Genove's guilt, the case was still referred to the board of arbitrators provided for in the
collective bargaining agreement. This board unanimously affirmed the findings of the
investigators and recommended Genove's dismissal. There was nothing arbitrary about
the proceedings. The petitioners acted quite properly in terminating the private
respondent's employment for his unbelievably nauseating act. It is surprising that he
should still have the temerity to file his complaint for damages after committing his utterly
disgusting offense.
Concerning G.R. No. 76607, we also find that the barbershops subject of the concessions
granted by the United States government are commercial enterprises operated by private
persons. They are not agencies of the United States Armed Forces nor are their facilities
demandable as a matter of right by the American servicemen. These establishments
provide for the grooming needs of their customers and offer not only the basic haircut and
shave (as required in most military organizations) but such other amenities as shampoo,
massage, manicure and other similar indulgences. And all for a fee. Interestingly, one of the
concessionaires, private respondent Valencia, was even sent abroad to improve his
tonsorial business, presumably for the benefit of his customers . No less significantly, if
not more so, all the barbershop concessionaires are, under the terms of their contracts,
required to remit to the United States government fixed commissions in consideration of
the exclusive concessions granted to them in their respective areas.
This being the case, the petitioners cannot plead any immunity from the complaint filed by
the private respondents in the court below. The contracts in question being decidedly
commercial, the conclusion reached in the United States of America v. Ruiz case cannot be
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 applied here.
The Court would have directly resolved the claims against the defendants as we have done
in G.R. No. 79470, except for the paucity of the record in the case at hand. The evidence of
the alleged irregularity in the grant of the barbershop concessions is not before us. This
means that, as in G.R. No. 80258, the respondent court will have to receive that evidence
first, so it can later determine on the basis thereof if the plaintiffs are entitled to the relief
they seek. Accordingly, this case must also be remanded to the court below for further
proceedings.

IV
There are a number of other cases now pending before us which also involve the question
of the immunity of the United States from the jurisdiction of the Philippines. This is cause
for regret, indeed, as they mar the traditional friendship between two countries long allied
in the cause of democracy. It is hoped that the so-called "irritants" in their relations will be
resolved in a spirit of mutual accommodation and respect, without the inconvenience and
asperity of litigation and always with justice to both parties.
WHEREFORE, after considering all the above premises, the Court hereby renders judgment
as follows:
1. In G.R. No. 76607, the petition is DISMISSED and the respondent judge is directed to
proceed with the hearing and decision of Civil Case No. 4772. The temporary restraining
order dated December 11, 1986, is LIFTED.
2. In G.R. No. 79470, the petition is GRANTED and Civil Case No. 829-R(298) is
DISMISSED.
3. In G.R. No. 80018, the petition is GRANTED and Civil Case No. 115-C-87 is
DISMISSED. The temporary restraining order dated October 14, 1987, is made permanent.
4. In G.R. No. 80258, the petition is DISMISSED and the respondent court is directed to
proceed with the hearing and decision of Civil Case No. 4996. The temporary restraining
order dated October 27, 1987, is LIFTED. LibLex

All without any pronouncement as to costs.

SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Padilla,
Bidin, Sarmiento, Cortes, Grio-Aquino, Medialdea and Regalado, JJ., concur.

Footnotes

1. Civil Case No. 4772.

2. Annex "B", pp. 36-38.

3. Rollo, p. 88.
4. Civil Case No. 829-R(298).
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 5. Annex "A", Rollo, p. 38.
6. Civil Case No. 115-C-87.

7. Annex "A," Rollo, p. 33.

8. Rollo, p. 69.
9. Civil Case No. 4996.

10. Annex "A," Rollo, p. 58.

11. Rollo, p. 181.

12. Kawanakoa v. Polybank, 205 U.S. 349.

13. De Haber v. Queen of Portugal, 17 Q.B. 171.

14. Garcia v. Chief of Staff, 16 SCRA 120.

15. 34 Phil. 311.

16. Santos v. Santos, 92 Phil. 281; Lyons v. United States of America, 104 Phil. 593.

17. Froilan v. Pan Oriental Shipping Co., G.R. No. 6060, September 30, 1950.

18. Republic v. Purisima, 78 SCRA 470.

19. United States of America v. Ruiz, 136 SCRA 487.

20. Lim v. Brownell, 107 Phil. 345.

21. 57 SCRA 1.

22. 136 SCRA 487.

23. 50 O.G. 1556.

24. 162 SCRA 88.

25. Supra.

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